Jeff Owns 50% of an S Corporation's Stock with a Basis

question 96

Essay

Jeff owns 50% of an S corporation's stock with a basis in his stock of $50,000 on January 1. In addition, the S corporation owes Jeff $30,000 on January 1. The debt has a basis of $30,000 and is evidenced by a note. The S corporation reports an ordinary loss of $150,000 for the current year. The next year, it reports ordinary income of $20,000. On January 1 of the third year, the note is repaid. Due to the repayment of the note, Jeff must report what?

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Definitions:

Corpus Callosum

The large band of neural fibers connecting the two hemispheres of the brain, facilitating interhemispheric communication.

Longitudinal Fissure

The deep groove that separates the two hemispheres of the vertebrate brain.

Basal Ganglia

The basal ganglia are a group of structures in the brain involved in processing information related to movement, emotions, and learning.

Limbic System

A complex system of nerves and networks in the brain, involved in emotions such as fear and pleasure, as well as drives like hunger and sex.